Main menu

New research addresses how we make decisions

Jeffrey Stevens is a psychologist and assistant professor at the University of Nebraska-Lincoln. His latest research is challenging some of the long-held beliefs about how we make decisions, particularly timing and similarity of choices. (Courtesy photo)

Listen to this story:

April 19, 2016 - 6:45am

Think about all of the decisions you've made since you woke up this morning. Bacon and eggs for breakfast or a healthy serving of fruit? What route should you take to work? NET News sat down with University of Nebraska-Lincoln psychologist and assistant professor Jeffrey Stevens to talk about his latest research uncovering new evidence regarding why we make the decisions we do.

NET NEWS: Prior research on decision-making tends to point toward gratification as being the motivation for why we do what we do - instant versus delayed - but your research points to the idea of ‘similarity.’ Can you unpack that for us?

ASSISTANT PROFESSOR JEFFREY STEVENS: "So basically the question is: ‘Do you prefer delayed payoffs or immediate gratification?’ And so the way that people tend to think about this, previously, is that people are making these decisions based on devaluing the future. Things that are in the future aren't as valuable as things that you can get right now. For example, if I offered you the choice between receiving $100 right now or $110 next week, you might take that $110 next week and think, ‘Obviously $110 is greater than $100, but the $110 isn't worth really $110 to me because I have to wait a week to get it. So the ‘similarity’ idea is a slightly different way of looking at it. Instead of devaluing that $110 for a week, the way you might make that choice is to say, ‘Well, $100 and $110 are pretty much the same to me. There's not a big difference between them. They're similar to me. But getting something now versus waiting a week - I have a pretty strong preference for now.’ So you might choose this $100 now because you basically are treating the amounts - in this case the money- to be the same."

NET NEWS: How did your hypothesis for the ‘similarity’ concept form?

ASSISTANT PROFESSOR JEFFREY STEVENS: "This is something that some other folks in the decision-making world have developed before. And these people are interested in basically how people really make decisions rather than how mathematical models describe how they make decisions. These are psychologists interested in the side of the cognitive process of decision-making rather than economists who are just interested in the kind of outcomes of decision making. So in thinking about the process and how people might make these decisions, some folks decided this ‘devaluation’ thing so that sounds pretty complicated to have to develop or create internally, devalue, and come up with a value for something in the future. And you have to be able to obviously scale that to the time and things like that. It gets tricky and complicated. And a simpler way of doing this might just be this kind of ‘similarity’ idea. It's not worth trying to discriminate between $100 versus $110, but it is worth discriminating between now and the future. I think that's really kind of where the idea came from. Using introspection as a starting point of thinking, “how would I actually make this decision?’"

NET NEWS: What practical applications could this research have?

ASSISTANT PROFESSOR JEFFREY STEVENS: “The first step now is to really start to understand those judgments. Why would we consider one $100 and $110 to be similar? Would $112 be considered dissimilar? Where are these breakpoints, basically, so we can start to explore how people make those judgments and what factors from an individual might influence those judgments? For example, your income might influence whether you consider $100/110 to be similar or dissimilar. Donald trump probably considers $100 or $110 to be similar but the undergrads I work with here at UNL, maybe they want that extra ten dollars. That actually goes a long way for them. But in terms of applications, I think what's really nice about this is this can suggest interventions that we can start to develop to help people make better decisions. Often we want to make the choice that's better in the long term but it's hard for us when we're tempted by the short-term payoffs. If we can figure out a way to use ‘similarity’ to help people make those decisions then that would obviously be a nice application. If we can get people to start focusing on those amounts. Go for the big payoff basically… This idea can apply across the financial domains, across health domains, across environmental domains. There are lots of different domains where we can work through this. I’m hoping that we can start to develop some kind of rules of thumb that makes sense there. Like focusing on the amounts - focusing on those benefits. Things like that always emphasize that big payoff."